Taking the mystery out of home mortgages: Understanding closing costs

Shopping for a new home — that’s the best part. It’s exciting and fun to search for the “perfect” home in the right place with all the bells and whistles you’ve always dreamed of.

When you can finally say “This is the one!” — you negotiate a price, sign an agreement, and confidently expect that all the rest of the pieces will simply fall into place between now and moving day. But there’s still one area where you need to devote your attention: Your mortgage loan.

“The majority of homebuyers, of course, will need to obtain a mortgage loan to buy that home of their dreams. But most of the time, buyers are led to believe that buying the home and getting the mortgage loan are part of the same process — and that’s simply not true,” said Rick Piette, owner of Las Vegas-based Premier Mortgage Lending.

“Your Realtor probably helped you locate, negotiate, and reach an agreement with the seller to buy that home — and you’ve naturally relied on their guidance as an industry professional. That’s great, because they know real estate,” Piette said. Here’s the catch: They don’t make mortgage loans. So if they have recommended that you apply for a loan with their “preferred lender,” you may want to ask yourself a very important question: “What’s in it for them?”

The answer may be simple: Money. And it’s most often going to come from you.

“At times, it may seem that the mortgage loan industry is intentionally confusing for consumers,” Piette said. “And it can be, really. But there are things that all borrowers should be aware of that can potentially save them thousands of dollars in obtaining a mortgage loan, they include marketing services agreements (MSAs) and service release premiums (SRPs).

Put simply:

• MSAs are an agreement between a mortgage lender and a real estate broker, where a fee is paid to the broker when they refer a client to that lender.

• An SRP is a source of undisclosed income that a lender can make from your mortgage loan that typically charges the borrower a higher interest rate. Mortgage brokers, such as Premier Lending, are not allowed to earn SRPs by law.)

“I’ve seen this happen so often over the years,” Piette said. “An unknowing, trusting homebuyer will walk right into this trap, and it’s a shame because it ends up unnecessarily costing that buyer a lot of money. Homebuyers need to understand that not all mortgage lenders are the same, and that’s why they should shop around and get at least two different loan estimates so they can compare the numbers.

“I tell all borrowers right up-front there are only two things that matter in getting the best deal on a mortgage loan: The interest rate, and the cost of the loan fees,” Piette said. “The first matters after you close, the second matters before. The “prepaid” and “reserves” items on loan estimate should be the same no matter which lender you use, as those address property taxes, HOA (homeowners association) dues, and other fixed items that go with the property itself. But the fees and the interest rate can vary widely.

“At Premier, we’ve gone even further. By designing our business model around providing high-quality service combined with low cost, our traditional mortgage loans, for example, actually charge no fees. Borrowers love our loan estimates because under lender charges it shows “$0.00,” Piette said.

For additional information, call 702-485-6600. Or, apply online at www.premiermortgagelending.com. To discover the facts about mortgage loan costs, visit KnowBeforeYouOweNevada.com.

Premier Mortgage Lending, NMLS No. 393282, is at 701 N Green Valley Parkway, No. 125 in Henderson. The full-service lender is a member of the Las Vegas and Boulder City chambers of commerces, Better Business Bureau and Southern Nevada Home Builders Association, as well as an affiliate member of the Greater Las Vegas Association ofRealtors.